Though he freely admits to “typosquatting,” as the practice is called, Temme was irked that Microsoft never sent him a cease-and-desist letter, instead making its first move in court. He has maintained that he would have surrendered the Web addresses – and still would – if Microsoft asked nicely.

In a federal lawsuit filed last month, Microsoft alleged that Temme and his North Hollywood company, Romfab, infringed its Hotmail and MSN trademarks and violated the Anti-Cybersquatting Consumer Protection Act. Microsoft asked for statutory damages of $100,000 per domain name, for a total of $2.4 million.

Last week, however, Temme got a letter from Microsoft law firm Orrick Herrington & Sutcliffe, with a settlement offer of $500,000.

“What Microsoft is in effect trying to do is put a small company of eight employees out of business,” Temme told seattlepi.com Tuesday. “It’s extortion! All they could have wanted to do was get the domain names.”

But there’s another side to this story. Temme said he has about 1,000 domains associated with typosquatting – and this practice has attracted a number of other lawsuits from a number of other companies.

Dell Computers and the American Automobile Association (AAA) are notable plaintiffs. According to court documents, Temme and AAA settled out of court for an undisclosed amount of money in June 2009. Temme also was “permanently enjoined from any unauthorized use of AAA’s trademarks, or of marks confusingly similar to any of them,” wrote Judge G. Kendall Sharp of U.S. District Court for the Middle District of Florida.

Temme

In Dell v. Temme, a federal judge awarded the computer company nearly $130,000 for willfultrademark infringement and attorney fees, and ordered a similar injunction. It was a default judgement, in fact, because Temme never answered the complaint, according to documents. At the center of that case were the domains d3ell.com, de3ll.com, d4ell.com, de4ll.com, dedll.com, derll.com and dxell.com.

“For this particular defendant,” said Tim Cranton, associate general counsel for Microsoft, “there is a well-established history – including 12 lawsuits we’re aware of – of typosquatting to this degree.”

That generally suggests – especially if the alleged infringement is suspected to be willful – an ongoing business practice. Many typoquatters do it maliciously: They redirect unsuspecting Internet users to Web sites that load up their computers with malware.

Cranton

“Which isn’t the case here,” Cranton said. But Microsoft feels that Temme’s admitted typosquatting is confusing and annoying to Web users. And in general, Cranton said, people often are led to believe the typosquatting Web site is affiliated with the legitimate one.

“The only thing that I wanted was just clicks, this form of advertising you get from misdirecting,” Temme said. “And the consumers aren’t confused. That’s hooey! Consumers are not dumb.”

Temme has already said he would gladly turn over the domains to Microsoft. But he didn’t get that opportunity before Microsoft filed the lawsuit in U.S. District Court for the Western District of Washington, in Seattle.

Cranton said litigation is generally a last resort. But when a potential defendant has a history of typosquatting, Microsoft is more likely to go straight to court.

“We’ve found with certain entities that if we notify them prior to a lawsuit, that we will jeopardize our ability to protect our trademarks,” Cranton said.

Many malicious typosquatters dump, cover up or transfer their domains at the first sign of trouble. Temme, a 69-year-old who for 20 years has sold his $14,615 ROM Time Machine exerciser out of a warehouse on L.A.’s Lankershim Boulevard, said that’s just not him.

“I’m not one of those meanies who went hiding,” he said. “I’m not one of those evil typo dudes.”

Courtesy of Romfab

Manufactured in California since 1990, the ROM Time Machine allows you to “exercise in exactly 4 minutes per day,” according to the Web site. Temme said he has sold 5,300 in the past 20 years. And why is it so expensive? Well, Temme madewhyisitsoexpensive.com for that question.

He likens misspelled domain names to prime real estate. “It’s just like if you were to buy some property next to Disneyland,” he said last month. “Put a hotel on it, you should not be able to get sued for ‘property squatting.’”

But under the Anti-Cybersquatting Consumer Protection Act, Temme’s typosquatting could indeed be illegal. Temme has been taken to court before. And he’s admitted typosquatting to seattlepi.com.

“OK, so I did a naughty, right?” Temme said Tuesday. “But a punishment that’s the same as the death penalty? That’s ridiculous.”

He was referring to the $500,000 settlement offer that he says would kill his business. Temme said he won’t agree to that amount, nor will he waste time and money on a lawyer.

He said he plans to transfer all 24 of the domain names in question to a new account on Moniker.com, where he said he registered the typos more than 10 years ago. Then he’ll offer them to Microsoft, he said.

But it doesn’t sound like Microsoft will go away so quietly. Cranton likened Temme’s solution to a shoplifter who thinks he won’t be punished if he just gives back the candy bar he stole.

“From our perspective, if there are thousands of people doing this, we can’t sue all of them. We have to show that this is not a valid way to do business,” Cranton said. “Our goal is to have an enforcement program to get people to stop trying this, so they stop doing this in the first place.”

Cranton said Microsoft and Temme have been in contact, though Temme said it was indirect. Microsoft’s settlement offer, a copy of which seattlepi.com was able to view, said the company is “prepared to fully litigate” the case against Temme and Romfab.

Temme lamented that it might soon be time to retire anyway. The Anti-Cybersquatting Consumer Protection Act itself doesn’t jibe with his economic philosophies, which include the belief that advertising is the lifeblood of the U.S. economy.

He sees typosquatting as just another form of advertising. “Even though this typosquatting isn’t very nice and clean advertising,” he said, “no form of advertising is nice and clean.”

So this potentially expensive Microsoft lawsuit might be the last straw for Romfab.

“If this world is going to be this nasty,” Temme said, “why would I want to have anything to do with it?”